A study on the dynamics that influence customer satisfaction and loyalty towards various telecom service providers

Abstract

The Indian Telecom industry has witnessed exponential growth in the past few years. India today ranks second in the world in terms of the number of telephone subscriptions with a subscriber base of 1197.87 million at the end of Dec 2018. The overall tele density in India is 89.78 as on Dec 2018 as per TRAI reports. India also holds the distinction of being the second largest country in the world in terms of internet subscribers which stood at 604.21 million by the end of Dec 2018. The current governments push to promote digitization of India through the National Digital Communications policy which was launched in November 2018 has also provided a major thrust to the rapid growth in the telecom sector. This policy envisions to attract FDI to the tune of US$100 billion in the telecommunications sector by the year 2022.

 

This has resulted in increased pressure on margins and better pricing power due to consolidation in the telecom industry. In such a scenario, service quality has become a fundamental differentiating factor; both in terms of increasing customer base as well as maintaining brand loyalty of existing customers. Though this aspect of service quality is very vital from the perspective of sustainable growth and revenue generation, yet it has always been overlooked by most telecom players whose only priority seems to be increasing their subscriber base. The present study attempts to identify the factors that affect customer satisfaction and explore the interrelationship between those factors with brand loyalty and customer retention.

 

As a part of this study, relevant literature review was done, and an instrument was developed based on the SERVQUAL scale along with the added dimension of customer perceived network quality to measure the service delivery standards and the technical aspects of various service providers. The survey was conducted in the city of Guwahati with a sample size of 100 regular customers of wireless mobile services. 

 

The factors included in the study were subject to multiple regression analysis to analyse and highlight the key service improvement areas. Also, factor analysis was conducted to find out the most significant factors from the customer point of view which affect customer loyalty. The results of the study highlighted that responsiveness were the most significant factor which impacts customer satisfaction. The other factors that impacted customer satisfaction as highlighted by the regression model in order of priority was reliability, customer perceived network quality, assurance, convenience, empathy and tangibility of the service provided.  As indicated in the study, telecom service providers need to prioritize the intangible aspects of the service which have a greater impact on customers perceived service quality perceptions rather than the physical aspects of the service. The study also found that with the advent of mobile number portability, customers are more prone to brand switching if they are not satisfied with their current service providers. It can therefore be concluded that customer satisfaction directly affects brand loyalty w.r.t mobile service providers